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BTG Pactual tops Brazil M&A rankings as recovery gains steam

By Guillermo Parra-Bernal and Natalia Gómez

SAO PAULO, Oct 1 (Reuters) - Grupo BTG Pactual SA

led Brazil's mergers and acquisitions rankings in

the first nine months as Chief Executive Officer André Esteves'

focus on advising fast-growing segments translated into almost

$4 billion worth of announced deals in the July-September period


The São Paulo-based bank leapfrogged rivals such as Credit

Suisse Group and Itaú BBA in so-called league tables after

landing 14 deals in the third quarter alone, Thomson Reuters

data showed. So far this year, BTG Pactual has advised on 36

transactions totaling $11.73 billion, or a third of announced

deals in the year through Sept. 30.

Companies announced $34.15 billion worth of deals in Brazil

in the first nine months of the year, down 37 percent from a

year earlier, a quarterly Thomson Reuters report on M&A activity

said. That is the lowest for the January-to-September period

since $14.07 billion in deals were announced in 2005. The number

of deals fell to 426 in 2013 from 647 in the same period of last

year, the report showed.

Takeovers will continue to gain traction because of the need

to consolidate market gains in some industries, the involvement

of private-equity firms in local M&A and interest from global

conglomerates in tapping Brazil's nearly 200 million consumers,

said Marco Gonçalves, managing director for M&A at BTG Pactual.

Gonçalves and other bankers shrugged off a view among many

investors for months that erratic policy decisions, mounting

state interference in some sectors and a slowing economy were

behind a slump in M&A activity in Brazil. Instead, they said the

deterioration in global markets and a price gap between buyers

and sellers were the main culprit behind the slump.

"There is more visibility in terms of the macroeconomic

outlook and, despite the existence of a great deal of

uncertainty in global markets, bidders and sellers are finally

reaching common ground," Gonçalves said in an interview at BTG

Pactual's offices in São Paulo.

As Brazil's $2.3 trillion economy stagnated, buyers pressed

for lower prices while sellers refused to give in - creating a

mismatch that prevented the completion of several deals for

months. In addition, worries that the U.S. Federal Reserve will

soon taper off years of economic stimulus also kept global

investors and dealmakers cautious.

But an 11 percent slump in Brazil's currency, the real

, since May helped bring down the price of many Brazilian

companies more attractive for potential bidders in dollar terms.

"That might have made valuations a little more attractive,

perhaps helping close the price gap," Alessandro Farkuh, head of

M&A for Bradesco BBI, the investment-banking unit of Banco

Bradesco SA, said in a phone interview.


For investment banks, which depend on giving merger advice

for about half their revenue in Brazil, the government's

willingness to sell rights to drill for oil and operate airports

and toll roads could mean a boon for business.

Strategic buyers, especially local players in the consumer

goods and infrastructure sectors, are looking for takeover

targets in a country where about 40 million people joined the

middle class in the past decade, said Fabio Mourão, who heads

M&A advisory for Credit Suisse in São Paulo.

"Foreign investors are a little more cautious, because they

don't operate here. That is why you should see more local

consolidation movements - as foreigners stay on the sidelines,

strategic local investors gain space," Mourão said.

BTG Pactual advised Vale SA on the $1.8 billion

sale of its VLI SA general rail- and port-cargo unit to a group

of Canadian, Japanese and Brazilian investors. The bank also saw

the fruits of a non-exclusive partnership with debt-laden tycoon

Eike Batista after advising on a $559 million stake in logistics

company LLX Logística SA to EIG Global Energy

Partners in August.

The bank's strong dealflow in the third quarter included

cross-border transactions in the real estate, card payment

processing, mining and leisure industries. BTG Pactual expects

deals in the infrastructure and services sectors to also gather

pace through year-end, Gonçalves added.

Credit Suisse trailed BTG Pactual and ranked second in terms

of deal size, advising on 16 takeovers worth $9.28 billion. The

deals included education company Estacio Participações SA's

$271 million purchase of rival TCA Investimentos e

Participações Ltda. Credit Suisse also advised LLX on the EIG


Foreign banks such as Credit Suisse have stayed atop

rankings in the past few months as private equity and sovereign

wealth funds look for advisors with global reach to help them

with Brazilian deals.

"Buyout firms are well capitalized, and what I take from my

talks with them is that more deals are in the offing," Credit

Suisse's Mourão added.

Itaú BBA, the investment-banking unit of Brazil's No. 1

private-sector lender Itaú Unibanco Holding SA,

advised on $7.11 billion worth of deals in the

January-to-September period. Bradesco BBI ranked fourth, after

participating in 12 deals worth $5.46 billion.

Itaú BBA advised on MMX Mineração e Metálicos SA's

sale of its Chilean unit in August. Itaú was No. 2

ranked in number of deals, with 29 - only behind BTG Pactual.

The following is a table with M&A rankings in Brazil for the

first nine months of the year.





1. Grupo BTG Pactual SA $11.73 bln 36 34.3 pct


Credit Suisse Group $9.28 bln 16 27.2 pct


Itaú BBA $7.11 bln 29 20.8 pct


Bradesco BBI $5.46 bln 12 16.0 pct


Bank of America $4.28 bln 7 12.5 pct

Merrill Lynch


Goldman Sachs Group $4.05 bln 9 11.9 pct


Morgan Stanley & Co $3.53 bln 6 10.3 pct


Citigroup Inc $3.27 bln 3 9.6 pct


Rothschild $3.20 bln 9 9.4 pct


Deutsche Bank AG $1.77 bln 3 5.2 pct